The S&P 500 pushed to record highs this week as investors rallied behind strong corporate earnings and growing confidence that artificial intelligence investments will drive sustained profit growth. The benchmark index advanced 3.6% for the week ending August 7, closing at 7,757.64, its best weekly performance since April and marking the 25th record close of 2026.
Strong earnings results fueled the rally. According to FactSet data cited in earnings reports, 86% of S&P 500 companies beat analyst expectations through early August, well above the long-term average of 68% since 1994. The blended earnings growth rate for the second quarter reached 50.4% year-over-year, far exceeding the 23.3% expectation at quarter-end, according to Forbes research.
AI spending by major technology companies proved to be the key driver. J.P. Morgan analysts noted that benefits of rising AI investments became clearer in the second quarter, especially at Google, Amazon, and Microsoft, where strong cloud growth, larger backlogs, and better cash-flow visibility eased investor concerns about returns on spending. The Magnificent 7 tech stocks—Microsoft, Meta, Amazon, Apple, NVIDIA, Alphabet, and Tesla—rose 4.7% for the week, outpacing the broader market.
The strength in earnings prompted major Wall Street forecasters to turn more bullish. On August 10, J.P. Morgan raised its year-end S&P 500 target to 8,000 from 7,800, citing prospects of solid corporate earnings and rising confidence that AI investments would drive faster revenue growth. The new target implies about 3.1% upside from Friday’s close. J.P. Morgan also revised its S&P 500 earnings-per-share forecasts upward to $365 for 2026 and $420 for 2027, compared with earlier expectations of $350 for 2026 and $390 for 2027.
The earnings beat and AI momentum come at a time when investors have grown more confident about the economic outlook. A weak jobs report released on August 8—showing nonfarm payrolls fell by 23,000 in July—actually helped stocks by easing concerns about aggressive interest-rate hikes. Combined with the strong earnings backdrop, the softer labor market data suggested the Federal Reserve may hold off on raising rates in September, supporting risk assets.
Despite the strong earnings and optimistic guidance, J.P. Morgan maintained its forward valuation multiple target at about 20 times earnings, citing higher interest rates, geopolitical risks, and a large supply of equity and debt issuance. The S&P 500 has gained 13.3% so far this year, buoyed by AI optimism and solid corporate profit growth, even as uncertainty over Middle East tensions and oil markets persisted.
Sources
- Reuters — J.P. Morgan’s August 10 target increase to 8,000, earnings beat rates, and AI-driven growth at hyperscalers
- Forbes — 86% earnings beat rate, 50.4% blended earnings growth, Magnificent 7 performance, and sector-level earnings insights
- CNBC — S&P 500 3.6% weekly gain through August 7, 2026
- Yahoo Finance — S&P 500 record close at 7,757.64, weekly performance data
- Investopedia — Weekly gain confirmation and comparison to April baseline
- Wall Street Journal — Weekly gain metrics and largest gains since April 17
